FTC should block merger of Express Scripts and Medco

Federal Trade Commission Chairman Jon Leibowitz recently joined Minnesota Sen. Amy Klobuchar at the public forum, "A Dose of Common Sense: Ensuring Affordable Access to Medication," in Edina. Klobuchar has battled endlessly to rein in the nation's out-of-control drug costs, and as top antitrust cop, Leibowitz plays a crucial role in this battle.

Nothing is of greater concern to ensuring access to affordable medications than the proposed merger of Express Scripts with Medco.

This merger would combine two of the nation's three largest pharmacy benefit managers (PBMs), creating a PBM behemoth covering more than 150 million Americans.

PBMs are the middlemen that work with drug manufacturers and pharmacies to form pharmacy networks that they then sell to insurers, employers and unions. Although little known, these entities are able to reap supra-competitive profits that only continue to grow. In less than a decade, the profits of the big three PBMs have skyrocketed from $900 million to over $6 billion. A substantial portion of these profits surely come from cost-savings that should reside in the pockets of consumers.

Many restrict pharmacy networks

How do they make money? PBMs often engage in underhanded conduct that ultimately harms consumers. As a common business practice, many PBMs restrict pharmacy networks to block competition and force consumers to their wholly owned mail-order distribution channels. These networks deny patient choice and limit access to medication — which is particularly harmful to rural Minnesotan consumers. The major three PBMs have been the subject of a series of major district and federal cases — totaling more than $370 million in penalties and fines — dealing with consumer protection violations such as drug switching and privacy violations.

Should this merger be approved, the resulting mega-PBM would have the market power to effectively force plans into highly restrictive pharmacy networks — to the ultimate misfortune of consumers. Moreover, Express Scripts would have increased leverage to cut reimbursement to pharmacies below competitive levels, seriously threatening the viability of the community pharmacies that many consumers depend on as primary healthcare providers.

Consumers will pay more

All in all, as a result of this merger, the profits of the dominant PBMs will continue to rise while consumers will continue to pay more for their needed medications.

There is a simple common-sense answer. Public officials like Klobuchar should call on the FTC to block this merger.